Kenya Pipeline Company (KPC) has secured a long-term crude oil storage and handling agreement that is expected to strengthen its role in Kenya’s emerging oil export industry and unlock new revenue streams from its Mombasa-based infrastructure.
The 25-year contract, signed through KPC’s wholly owned subsidiary Kenya Petroleum Refineries Limited (KPRL) with Gulf Energy E&P B.V. (GEBV), is projected to generate about KSh93.68 billion (US $725M) in gross revenue over its duration. The projected earnings are based on anticipated crude oil volumes and applicable tariffs and may vary depending on future operational conditions.
Under the agreement, KPRL will provide crude oil receipt, storage, handling and export services through the Kipevu Oil Terminal II (KOT II) in Mombasa. The deal is closely linked to the planned development of the South Lokichar oil fields in Turkana County, where Gulf Energy is expected to take over operations following the acquisition of Tullow Oil’s interests in Kenya. The project forms part of Kenya’s strategy to launch commercial oil production, with authorities targeting initial output of around 20,000 barrels per day before scaling up to approximately 50,000 barrels per day in a later phase. First oil production is currently expected by the end of 2026.
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Change of plans
The latest development reflects a shift from earlier plans to construct a dedicated crude oil pipeline from Turkana to the coast. Instead, crude oil is expected to be transported by road or rail to Mombasa, where it will be stored at KPRL facilities before being loaded for export through KOT II. The agreement also provides a new commercial purpose for KPRL’s refinery complex, which has remained inactive since refining operations were halted in 2013. The facility offers substantial storage capacity and occupies a strategic location adjacent to the Port of Mombasa, making it well positioned to support future crude export operations.
In a related move, KPC has updated its service-level agreement with the Kenya Ports Authority (KPA) covering the operation and maintenance of KOT II. The revised arrangement outlines responsibilities for terminal operations, maintenance planning, performance monitoring and business continuity, ensuring smoother coordination between the two state-owned entities.
KPC said the agreements reinforce its position in Kenya’s petroleum supply chain while supporting efforts to optimise existing assets and diversify revenue sources. The company believes the arrangements will enhance the efficiency of crude export logistics and contribute to Kenya’s ambition of becoming a regional energy and petroleum trading hub.
